New World Full-Year Earnings Rise 26% on Higher Home Sales

Sept. 26 (Bloomberg) -- New World Development Ltd.,
controlled by the family of Hong Kong billionaire Cheng Yu-tung,
said full-year earnings climbed 26 percent on higher property
sales in the city and mainland China.

Underlying profit, which excludes property revaluation
gains and deferred taxes, rose to HK$6.33 billion ($816 million)
for the 12 months ended June 30 from HK$5.02 billion a year
earlier, the company said in a statement today. That compares
with the HK$6.59 billion average estimate of 14 analysts
compiled by Bloomberg.

New World and other Hong Kong developers,, including Cheung
Kong Holdings Ltd., controlled by Asia’s richest man Li Ka-shing, are accelerating sales of smaller apartments as demand
for bigger units from wealthy mainland Chinese buyers wanes.
Revenue from home sales in Hong Kong and China rose 92 percent
during the period under review, New World said today.

“Their sales have picked up considerably over the past
year as they focus on smaller units, which are what buyers look
for these days,” Adrian Ngan, an analyst at Citic Securities
International, said today before the earnings were announced.
“They should be able to keep this pace but I wouldn’t expect
another big jump.”

New World’s shares, the best performer in the Hang Seng
Property Index last year, are little changed in 2013. The stock
fell 1.2 percent to HK$11.88 at the close of trading in Hong
Kong. The earnings were announced during the noon trading break.

Cheng Retired

Cheng, 88, is 38th on the Bloomberg Billionaires Index with
a net worth of $19.3 billion. Last year, he retired as chairman
of the developer he helped found four decades ago and also from
Chow Tai Fook Jewellery Group Ltd., the world’s largest listed
jewelry chain. He was replaced by son Henry Cheng.

The company has sold more than 600 units at the Park
Signature, a project in the city’s northern Yuen Long district,
since sales began earlier this month, according to the company’s
website.

New World has already sold HK$4.2 billion of homes since
July, Executive Director Adrian Cheng told reporters in Hong
Kong today. The developer is targeting HK$10 billion in home
sales this fiscal year, he said.

Price Drop

Home prices in the city may drop about 10 percent at the
most, Chairman Henry Cheng said at the briefing.

Sun Hung Kai Properties Ltd., the city’s biggest developer,
said this month it will sell more smaller apartments after
booking lower profit and home sales for the full year ended June
30.

Hong Kong home prices have more than doubled since early
2009 on record low mortgage rates and an influx of mainland
Chinese buyers, prompting the government to impose measures,
including extra transaction taxes and tighter mortgage lending
rules, to quell concerns of an asset bubble.

New World, with businesses in property, infrastructure,
hotels and retail, last year won the right, for an undisclosed
price, from the Hong Kong government to develop a residential
and retail project in the city’s Mong Kok district. The company
owns hotels including the Grand Hyatt and Hyatt Regency in Hong
Kong, and also operates the Hong Kong Convention and Exhibition
Centre.

New World China Land Ltd., the company’s unit that focuses
on property developments in mainland China, said yesterday
contracted sales rose 69 percent in the year through June as it
posted a 50 percent gain in profit.